||08-05-2009 12:26 PM
HOT TOPIC----> Why The RICH CAN'T PAY for everything
Teeing Up the Middle Class - WSJ.com
As these analysts recognize, taxing the rich has its limits both economically and politically, such that members of Congress are not likely to tap that well again and again.
Also, the Democrats say, at least they are trying to pay for the health care initiative, rather than letting the deficit balloon as the Republicans, along with President George W. Bush, did when they created the Medicare prescription drug benefit in 2003. That program will add a projected $803 billion to the national debt in the decade through 2019, according to the White House budget office.
“They charged theirs on the government’s credit card,” Rahm Emanuel, the White House chief of staff, said of the Republicans.
“Democrats are more worried about the deficits,” Mr. Burman added, but “they put the burden on a tiny fraction of the population that they figure doesn’t vote for them anyway.”
“This idea that everything new that government provides ought to be paid for by the top 5 percent, that’s a basically unstable way of governing,” Mr. Burman said.
The panel, which is led by Paul A. Volcker, a former chairman of the Federal Reserve, is to report by Dec. 4. Overhauling the code, as in 1986, generally creates winners and losers across the board; leaving 95 percent of taxpayers unscathed will not be easy.
Proposals to raise about $50 billion over 10 years by taxing sugared drinks foundered partly because the levy would hit nearly everyone.
Administration officials recently began promoting a fallback. Rather than tax individuals, it would single out insurance companies that sell “Cadillac” plans. David Axelrod, a White House strategist, has described the proposal in populist terms, saying it would hit “the $40,000 policies that the head of Goldman Sachs has” and “not impact on the middle class.”
That position, analysts predict, cannot hold over time.
“There is no way we can pay for health care and the rest of the Obama agenda, plus get our long-term deficits under control, simply by raising taxes on the wealthy,” said Isabel V. Sawhill, a former Clinton administration budget official. “The middle class is going to have to contribute as well.”
The Obama advisers are laying the groundwork for taxing the middle class while claiming the deficit made them do it.
The liberal establishment is even further along in finally admitting that Mr. Obama wasn’t, er, telling the truth. A piece in the New York Times over the weekend declared in a headline that “the Rich Can’t Pay for Everything, Analysts Say.” And it quoted Leonard Burman, a veteran of the Clinton Treasury who now runs the Brookings Tax Policy Center, as saying that “This idea that everything new that government provides ought to be paid for by the top 5%, that’s a basically unstable way of governing.” They’re right, but where were they during the campaign?
In an editorial on February 26, “The 2% Illusion,” we wrote that the feds could take 100% of the taxable income of everyone in America earning more than $500,000 and still have raised only $1.3 trillion even in the boom year of 2006. The rich are fewer and less rich now, while the Obama budget is nearly $4 trillion.
Democrats already plan to repeal the Bush tax cuts, but that won’t raise enough money. So they’re proposing an income tax surcharge on “the wealthy,” but that won’t raise enough either. Democrats have no choice but to soak the middle class because only they have enough money to finance the liberal dream of yoking the middle class to cradle-to-grave government entitlements.
Democrats have already taxed the middle class by raising cigarette taxes to pay for the children’s health-care expansion. They’re also teeing up average earners with their cap-and-tax energy bill. Mr. Obama had hoped that cap-and-tax would raise some $646 billion over a decade, but Democrats in the House had to give most of that away in bribes to business to pass their bill. To finance ObamaCare, they’re also proposing another 10-percentage-point increase in the payroll tax on firms and individuals that don’t purchase health insurance. But this won’t raise enough money either.
So waiting in the wings is the biggest middle-class tax increase of them all: a European-style value added tax, or VAT. This tax would apply to every level of production or service, and it is beloved by politicians in Europe because it raises so much money so easily without voters noticing.Ezekiel Emanuel, a White House aide and brother of Chief of Staff Rahm Emanuel, has advocated a 10% VAT to finance national health care. Look for a VAT to be one of the prominent options when Mr. Obama’s tax reform commission issues its report later this year.
The undeniable reality is that you can’t run a European-style welfare-entitlement state without European-style levels of taxation on the middle class (and eventually without low European-style growth and high jobless rates). It’s looking more and more like Mr. Obama’s no-middle-class-tax pledge was one of the greatest confidence tricks in American political history
Obama tax SCAM.:singing::singing::singing::singing: